The net realizable value is used for purposes of valuing out of date merchandise in inventory.

Question

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The net realizable value (NRV) is the estimated selling price of inventory minus any estimated costs of completion, disposal, and transportation. NRV is used to value inventory at the lower of cost or market, which means that if the NRV is lower than the original cost, the inventory must be written down to the NRV value. This is done to accurately reflect the actual value of inventory on the balance sheet.

The Net Realizable Value Is Used for Purposes of Valuing